BOB MOSES: ‘KEEP PROGEN’S CASH IN BIOTECH’
December 4th 2008 02:02
Monday December 1, 2008
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PROGEN
Antisense chairman Bob Moses wants Progen to use part of its $70 million to bring several companies together to create a new cancer therapeutics group.
Mr Moses’s role in the Progen ‘coup group’ of shareholders has been unclear, until today.
Mr Moses told Biotech Daily that his group does not want to invest in Progen’s PI-88 liver cancer drug or for Progen to further invest in it.
Mr Moses said his group wanted to licence PI-88 (see below) and build a new company from Progen and several other public and private companies with related carbohydrate technologies and specialized skills to focus on advanced polysaccharides for cancer.
He said he had a formal term sheet to sell PI-88 to a small pharmaceutical company, to “get something for the asset which was not likely if there was a 100 percent capital return”.
Progen must pay Taiwan’s Medigen $2 million if PI-88 is licenced to a third party.
Mr Moses said that institutions representing a significant minority of Progen’s shares “clearly just wanted their money back”, but if the company returned all its funds to investors that would be a wasted opportunity for Australian biotechnology.
Mr Moses said he had sent a proposal to Progen chairman Dr Mal Eutick with “the concept of a company combining assets from Progen and at least two other companies in the space, which collectively would form a new more tightly focused company, with the skills focused on advanced carbohydrate compounds, some of which had been demonstrated in animals and humans to be highly effective in cancer”.
The proposal would give Progen shareholders three options: either request 100 percent of cash return at $1.10 a share; retain Progen shares to convert to the new cancer therapeutic company shares; or a ratio of cash return and support for the new company.
Mr Moses said this would not be starting a new company from scratch as there was very little, if any, discovery work required.
He said that the institutions wanting their money back appeared to represent less than one-third of all Progen’s shares on issue.
“Less than half of Progen’s cash (about $35 million of $70 million) would fund the new company very nicely,” Mr Moses said.
“Shareholders should have the choice – the current proposal is just a capital return for everyone, whether they want it or not,” he said.
He said that the cash return proposal meant non-cash assets would be converted to cash at “fire sale prices” and his group offered “upside opportunity to shareholders prepared to back our strategy”.
“We have animal and human data, a sharp focus on high quality polysaccharides and can create an experienced board,” Mr Moses said.
Dr Eutick told Biotech Daily there was some logic to the Moses cancer group proposal, but Progen had commissioned Price Waterhouse Coopers to investigate proposals and he did not want to pre-empt any recommendations.
“We definitely remain open to discussions,” Dr Eutick said. “All options are open.”
He said that Progen had not seen the data from the companies in Mr Moses’s proposal, nor had Mr Moses seen his data.
Dr Eutick said Progen’s 500 series drugs had produced “at least two good leads”.
He said Progen’s board would have to see all the proposals rather than just accept one.
“The biggest problem is getting enough detail to get a clear picture,” Dr Eutick said.
He said the 45 day time limit was why Price Waterhouse Coopers was putting all potential deals into a corporate framework.
Dr Eutick said that whatever happened, Progen’s shareholders would vote and give the company a mandate to proceed.
Progen climbed 2.5 cents or 3.21 percent to 80.5 cents.
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